Sunday 25 January 2015

More renting out entire HDB flats as resale market cools in 2014

By Yeo Sam Jo, The Straits Times, 24 Jan 2015

MORE people are renting out their entire Housing Board flats amid a cooling resale market, with many upgrading to private housing.

The number of subletting approvals last year jumped by about a fifth, from 30,074 in 2013 to an all-time high of 36,228 last year, HDB data released yesterday shows.

In the last quarter alone, 10,365 approvals were granted.

There were also 48,120 fully sublet units at the end of last year - a 5.4 per cent increase from the 45,674 units at the end of 2013.

An HDB spokesman told The Straits Times that flat owners' "desire to monetise their flats" and "availability of alternative accommodation" are among factors influencing the rise in subletting approvals.

Property agents and analysts say many flat owners upgrading to private homes are unwilling to sell off their HDB units, partly for investment reasons.

"They are keen to keep a second property for investment," said OrangeTee's director of research Christine Li. "They know that once they let go, they cannot buy back another one."

She was referring to rules introduced in 2010 which do not allow private home owners to buy an HDB flat unless they dispose of their existing private properties.

"This makes sense from an investment angle," said ERA Realty's key executive officer Eugene Lim, noting that the rate of returns for leasing HDB flats is "very attractive" compared to that of condominiums, due to their relatively lower purchase price.

DWG agent Benedict Lim agreed: "An average three-room HDB flat can already fetch about $2,100 to $2,500 a month depending on location."

He further noted that some flat owners sublet their units after moving to live with their family members or getting posted overseas for work.

The weakening housing market has also played a part, according to R'ST research director Ong Kah Seng. "The resale market now is very cold and makes it hard to fetch a good price," he said. "It makes more sense for people to hold on to their HDB flats and rent it out instead. They hope to have the best of both worlds."

Such is the case for administrative assistant Chris Lee, 60, who lives with her husband in a condominium in Clementi. The couple let out their three-room Tanglin Halt flat for about $1,800 a month to a family of four.

"My husband is retired, so we need the extra income," said Madam Lee. "It really does help with our property taxes and conservancy charges."

HDB, private home prices slide in 2014
Values of both types of home fell for full year, for the first time in 13 years
By Cheryl Ong, The Straits Times, 24 Jan 2015

FOR the first time in 13 years, both public and private housing prices lost ground for the full year in 2014 - and analysts expect even steeper price falls this year.

Cooling measures sent values of private properties down 1.1 per cent in the fourth quarter, taking the full-year slide to 4 per cent, the Urban Redevelopment Authority said yesterday.

Prices of HDB resale flats fell 1.5 per cent in the three months ended Dec 31, HDB data showed yesterday. For the full year, HDB resale prices sank 6 per cent.

This is the first time since 2001 that both public and private home prices have fallen over a full year.

The stagnating market is likely to worsen this year, analysts said, though not dramatically.

Since the third quarter of 2013, HDB resale flat prices have fallen more quickly than those of private homes. That is set to continue as a surging supply of new public flats and buyer curbs weigh on the market. The HDB's move to ramp up its building programme to meet demand from first-time buyers will flush the market with 16,900 Build-To-Order (BTO) flats this year, said HDB, after 22,455 were offered last year.

A mortgage servicing ratio, which limits monthly housing payments at 30 per cent of the buyer's gross monthly income, has hit many, while newly minted permanent residents can buy an HDB flat only after three years.

"HDB sellers are more willing to compromise because of their weaker bargaining position as some may need to dispose of their flats before moving into their new homes," explained Dr Lee Nai Jia, head of research at DTZ Singapore. "Developers, in contrast, have enjoyed healthy profits from the previous years and are in no hurry to slash prices, lending support to the private market."

The private market faces a "perfect storm" of factors that point to further softening in prices.

An overhang of new home completions at 24,796 units this year looms over the market amid tightened immigration policies.

Vacancy rates at private homes rose to 7.8 per cent in the fourth quarter, up from 7.1 per cent in the preceding quarter - which in itself was a nine-year high. This was exacerbated by a sharp fall of 3 per cent in rentals in the last quarter over a 0.9 per cent increase in the preceding quarter.

Expectations are also high for the United States Federal Reserve to hike interest rates in the second half of the year, posing more risks to highly leveraged home owners in a flailing rental market.

"These headwinds are expected to persist through the year, amid uncertainty in the global economic arena," said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

It is against this backdrop that buyers might decide to "wait and see" this year, said Ms Christine Li, research head at OrangeTee.

A Ministry of National Development spokesman said yesterday that "property market cooling measures are intended to keep the market stable and sustainable" and that the price decline over the past year has been "mild".

Market watchers have placed their bets on a slip of 5 to 8 per cent for both HDB and private home prices this year.

Five-room flat at Pinnacle@Duxton goes for over $1 million
By Janice Heng, The Straits Times, 24 Jan 2015

A FIVE-ROOM Pinnacle@Duxton flat has broken the $1 million mark in the resale market, joining a small but growing group of public housing units that have crossed the seven- digit mark.

The 107 sq m unit located above the 40th floor went for $1,028,000 this week, according to SRX Property.

This is the most that a resale unit in the premium public housing project has fetched so far.

Units there are prized for their central location, and those on higher floors are known for their views, said DTZ agent Stephanie Tok, who helped broker this transaction. The project has seven 50-storey blocks.

Both the buyer and seller declined to comment on the deal.

At the project's launch in 2004, new four-room flats were priced from $289,200 to $380,900, and five-roomers from $345,100 to $439,400.

At least nine other Pinnacle@ Duxton flats have been resold since this became possible last December, when owners began to meet the five-year minimum occupation period.

But prices have varied greatly. Of the two other five-roomers that have been sold, a 106 sq m unit located no higher than the sixth floor went for $918,000. Another unit of the same size, but above the 30th floor, fetched $980,000.

Four-room prices ranged from $835,000 for a 95 sq m unit above the 30th floor, to $955,000 for a 97 sq m unit above the 45th floor.

The latter is the highest per sq ft price among Pinnacle@Duxton units, at $915 psf.

The $1.03 million five-room unit went for $894 psf.

As this is a unique, premium project, experts do not expect its sky-high prices to have much effect on the overall sluggish Housing Board resale market.

"Even if Pinnacle@Duxton resale flats were to continually exceed the $1 million mark, it will not lead to an increase of flat buyers' interest for HDB resale flats and recovery in resale flat prices," said R'ST Research director Ong Kah Seng.

But there could be an influence on prices for other prime units in mature estates such as Bishan and Marine Parade, said SLP International Property Con- sultants' head of research Nicholas Mak. Bishan is home to several rare maisonette units, one of which holds the current record resale price of $1.09 million.

Vacancy rate for private homes at 10-year high
Experts say more units completed and fewer expats coming to Singapore
By Rennie Whang, The Straits Times, 24 Jan 2015

THe vacancy rate for private homes is at its highest level in nearly 10 years - the result of rising completions and curbs on foreigners coming here to work, experts say.

About 7.8 per cent, or 24,062 completed private residential units, were vacant at Dec 31 last year, according to figures released by the Urban Redevelopment Authority (URA) yesterday.

That was an increase from 7.1 per cent or 21,569 vacant units in the third quarter of last year and the highest vacancy rate recorded since 8.4 per cent in the fourth quarter of 2005.

The vacancy rate includes sold and unsold units, but most of the completed units would have been sold as they were launched before the introduction of the total debt servicing ratio, said Mr Alan Cheong, Savills Singapore research head.

"(The high vacancy rate) is symptomatic of supply coming on stream faster than demand. And the structure of demand has been changing... Whereas, for the past 30 or 40 years, one expatriate could be mapped onto one apartment, one expatriate may now be taking up a smaller apartment or a room."

Housing stock rose by a net 6,304 units in the fourth quarter of last year - a historical quarterly high, said a URA spokesman.

Last year, 19,941 private residential units were completed, up 52 per cent from 13,150 in 2013.

Another 21,359 units are pegged for completion this year, and 20,919 next year.

"It's quite a great magnitude; vacancy rates could rise further if leasing demand does not pick up," said Mr Ong Teck Hui, JLL national research director.

Large projects completed in the fourth quarter included 1,715-unit d'Leedon, 473-unit Seastrand and 452-unit Parc Vera.

As most new completions are condos, the non-landed segment's vacancy rate rose to 9.1 per cent in the fourth quarter from 8.2 in the third quarter, said Mr Ong.

The vacancy rate for landed homes was 3.4 per cent in the fourth quarter, down slightly from 3.5 per cent in the preceding quarter.

The completions have put pressure on rents, which fell 1 per cent for the fourth quarter and 3 per cent for the full year - a reversal of four straight years of rising rents. Rents added 0.9 per cent in 2013 and 2.14 per cent in 2012.

Across different residential types, rents for semi-detached homes fell the most at 7.6 per cent for the year, and non-landed homes the least at 2.6 per cent.

Non-landed rents fell 3.7 per cent in the central region, 2.5 per cent in the suburbs and 0.2 per cent in the city fringe from a year back.

Rents are set to fall by up to 8 per cent this year, with the drop most pronounced in the central region as firms keep cutting back on housing allowances, said Mr Ong Kah Seng, R'ST Research director.

The market could head towards a 10 per cent vacancy rate this year, said Mr Cheong. "With cooling measures in place, we are heading into a period of uncertainty and sailing into a storm."

Yet even if measures are relaxed now, demand may not come back, he said. For example, many multinational corporations will not be pushing as many staff to Asia as their home economies have not recovered for some time, and they are facing slower demand in Asia owing to China's slowdown, he said.

"As long as Singaporeans hold a job, we can take 10, 11 per cent vacancy rates. But if another global crisis hits and unemployment goes up, rents will start to crash and there will be foreclosures. In fighting asset inflation, we have also increased risk."

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